CITY OF WILLCOX, ARIZONA, ET AL., PETITIONERS V. FEDERAL ENERGY
REGULATORY COMMISSION, ET AL.
No. 90-806
In The Supreme Court Of The United States
October Term, 1990
On Petition For A Writ Of Certiorari To The United States Court Of
Appeals For The District Of Columbia Circuit
Brief For The Federal Energy Regulatory Commission In Opposition
TABLE OF CONTENTS
Question Presented
Opinions below
Jurisdiction
Statutory provision involved
Statement
Argument
Conclusion
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1a-46a) is reported
at 912 F.2d 1496. The orders of the Federal Energy Regulatory
Commission (Pet. App. 47a-230a, 231a-344a) are reported at III FERC
Stats. & Regs. (CCH) Paragraph 30,867 and Paragraph 30,880.
JURISDICTION
The judgment of the court of appeals was entered on August 24,
1990. The petition for a writ of certiorari was filed on November 21,
1990. The jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).
STATUTORY PROVISION INVOLVED
Section 7(b) of the Natural Gas Act, as codified at 15 U.S.C.
717f(b), is reproduced at Pet. App. 346a.
QUESTION PRESENTED
Whether Section 7(b) of the Natural Gas Act, 15 U.S.C. 717f(b),
permits the Federal Energy Regulatory Commission to prescribe in
advance and on a generic basis the conditions under which the
abandonment of service will be authorized, rather than requiring
case-by-case adjudication.
STATEMENT
1. In Order No. 436, /1/ the Federal Energy Regulatory Commission
promulgated regulations that "envisage(d) a complete restructuring of
the natural gas industry" by changing the role of interstate pipelines
from that of merchants to that of transporters of natural gas.
Associated Gas Distributors v. FERC, 824 F.2d 981, 993-994 (D.C. Cir.
1987) (AGD I), cert. denied, 485 U.S. 1006 (1988). Under this new
regime, pipelines may secure a blanket certificate of public
convenience and necessity, pursuant to Section 7(c) of the Natural Gas
Act, 15 U.S.C. 717f(c), to transport natural gas on behalf of others.
If they do so, they must agree to assume "open access" status -- i.e.,
must agree to accept gas shipments from all would-be shippers. AGD I,
824 F.2d at 997. To foster a transition to "open access"
transportation, the Commission promulgated regulations under which any
sales customer of an open-access pipeline could convert specified
percentages of its contract right to purchase a certain volume of gas
from the pipeline to a right to have the pipeline transport gas that
the customer might purchase elsewhere.
In AGD I, the D.C. Circuit sustained most features of Order No.
436, but vacated and remanded the Commission's regulations for further
consideration of a few issues -- principally, for the Commission
either to address the pipelines' take-or-pay problems in connection
with its new open-access policy, or to explain adequately its reasons
for not doing so. On remand, the Commission adopted Order No. 500,
/2/ an interim rule and policy statement that instituted a plicy of
"equitable sharing" of take-or-pay liability across the natural gas
industry -- i.e., among producers, pipelines and customers. The
Commission also repromulgated, as part of Order No. 500, the
regulations offering the contract-demand conversion option. As set
forth in the final version of the rule, /3/ the repromulgated
regulations provide for pre-granted abandonment of transportation
service "upon the expiration of the contractual term of each
individual transportation arrangement." 18 C.F.R. 284.221(d). This
regulation applies to all transportation agreements -- those embodied
in new contracts and those that resulted from customers' conversion
from sales to transportation service.
2. In the decision below, the court of appeals sustained Order No.
500 in part, reversed the Order in part, and remanded for further
proceedings. Pet. App. 1a-46a. As relevant here, the court of
appeals remanded the pre-granted abandonment regulation for further
consideration. Id. at 42a-43a. The court of appeals rejected
petitioners' contention that Section 7(b) of the Act does not permit
the Commission to adopt the general rule in Order Nos. 500-H and 500-I
allowing pre-granted abandonment upon the occurrence of a specified
condition -- expiration of the transportation contract -- because it
effectively delegates the abandonment decision to the pipeline. Pet.
App. 36a-38a. But in the court's view, the Commission had not stated
a sufficient justification for that rule, because it "has not yet
adequately explained how pre-granted abandonment trumps another basic
precept of natural gas regulation -- protection of gas customers from
pipeline exercise of monopoly power through refusal of service at the
end of a contract period." Id. at 42a.
ARGUMENT
Petitioners argue (Pet. 9-10) that Section 7(b) of the Natural Gas
Act does not permit the Commission, by rule, to prescribe in advance
and on a generic basis the conditions under which abandonment of
specified services will be authorized. In their view, Section 7(b)
requires the Commission to engage in case-by-case adjudication of
abandonment applications and to hold a hearing on each proposed
abandonment. Petitioners further contend (Pet. 11-13) that the
holding by the court below on that point conflicts with the Fifth
Circuit's decision in Mobil Oil Exploration & Producing Southeast,
Inc. v. FERC, 885 F.2d 209, 222-223 (1989), and they urge (Pet. 14-15)
the Court to grant the petition in this case and consider it together
with Mobil Oil.
Since the petition for a writ of certiorari was filed, this Court
reversed the Fifth Circuit's decision in Mobil Oil. Mobil Oil
Exploration & Producing Southeast, Inc. v. United Distribution Cos.,
Nos. 89-1452 & 89-1453 (Jan. 8, 1991). In so doing, the Court
sustained the Commission's authority under Section 7(b) to issue a
rule that prescribes in advance the conditions under which abandonment
is authorized, and it specifically rejected the argument, advanced by
petitioners in this case as well (Pet. 9-10), that Section 7(b)
requires the Commission to conduct an individualized hearing on each
abandonment application. Slip op. 13-16. Because this Court has
recently and unanimously rejected petitioners' position, the petition
for a writ of certiorari should be denied. /4/
Review is especially unwarranted in view of the interlocutory
posture of this case. The court of appeals did not finally decide the
validity of the regulation petitioners challenge. Instead, it
remanded to the Commission for further proceedings on that question.
If the Commission retains the regulation (accompanied by the more
complete explanation required by the court of appeals), and if the
court of appeals sustains the regulation on further review, there will
be time enough for this Court to consider whether to review the
validity of the particular abandonment regulation petitioners
challenge.
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
KENNETH W. STARR
Solicitor General
WILLIAM S. SCHERMAN
General Counsel
JEROME M. FEIT
Solicitor
JOEL M. COCKRELL
Attorney Federal Energy Regulatory Commission
JANUARY 1991
/1/ Regulation of Natural Gas Pipelines After Partial Wellhead
Decontrol, 50 Fed. Reg. 42,408, 1982-1985 FERC Stats. & Regs. (Regs.
Preambles) (CCH) Paragraph 30,665 (1985).
/2/ Regulation of Natural Gas Pipelines After Partial Decontrol,
FERC Stats. & Regs. (Regs. Preambles) Paragraph 30,761 (1987).
/3/ Order No. 500-H, 54 Fed. Reg. 52,344 (1989), FERC Stats. &
Regs. (Regs. Preambles) Paragraph 30,867 (1989), on reh'g, Order No.
500-I, FERC Stats. & Regs. (Regs. Preambles) Paragraph 30,880 (1990).
Order Nos. 500-H and 500-I were issued on the limited remand in
American Gas Ass'n v. FERC, 888 F.2d 136 (D.C. Cir. 1989), in which
the court considered challenges to Order No. 500 as originally
promulgated.
/4/ Moreover, petitioners did not raise before the court of appeals
the broad statutory argument they present in this Court: that Section
7(b) absolutely bars the Commission from authorizing abandonment of
service by rule, on a generic basis. To the contrary, as the court of
appeals observed, petitioners "quite rightly" conceded that Section
7(b) permits the Commission to do so. See Pet. App. 36a-37a.
Accordingly, petitioners should not be permitted to challenge the
Commission's statutory authority in this Court -- quite aside from the
fact that their argument is now foreclosed by Mobil Oil. See Patrick
v. Burget, 486 U.S. 94, 99 n.5 (1988); EEOC v. FLRA, 476 U.S. 19, 24
(1986).
Petitioners framed the abandonment issue much more narrowly in the
court below, arguing that the particular pre-granted abandonment
authorization in this case exceeded the Commission's authority under
Section 7(b) because it effectively delegates the abandonment decision
to the pipeline. The court of appeals rejected that argument, see
Pet. App. 36a-37a, and this Court rejected a similar argument in Mobil
Oil, see slip op. 16.